Environmental sustainability—the new economic bottom line

That’s the message in Accounting for Sustainability: Practical Insights. The book represents the compilation of a five-year project—nicknamed “A4S”—sponsored by Prince Charles, Prince of Wales, that examined the feasibility of factoring industries’ impact on the environment into their economic spread sheets. Using case studies and interviews with leaders at major accounting firms, Accounting For Sustainability documents the bond between capitalism and environmental capital.

Novo Nordisk, a world leader in diabetes health care, also seized the role as leader in the growing field of sustainability accounting, an Accounting for Sustainability case study demonstrates, by assessing the cost of protecting the environment into the company’s business model. The book documents how external stakeholders began pushing Nova Nordisk to become more environmentally friendly in the early ’90s. In response, the corporation initiated a strategic initiative to embed its sustainability and financial reporting into a single document. This method of reporting turned it into an industry leader by 2004. Its financial reports include, for example, water and energy impacts per business unit for diabetes care and biopharmaceuticals. By allowing business units to track their water and energy usage per business line firms can now report and compare their environmental impacts and performance with other market competitors.

Novo Nordisk represents just one of a host of in-depth case studies completed during the five-year Accounting for Sustainability project initiated by Prince Charles in Great Britain. Through Novo Nordisk the book illustrates by example how sustainability works as a strategic business objective. Accounting for Sustainability uses other case studies to illustrate the role of accounting processes to support behavioral and business change; how to select key performance indicators (KPI) and the role of qualitative and quantitative financial and non-financial information.

The role of accounting processes to support behavioral and business change, for example, can serve as a significant tool for encouraging and guiding businesses into making more sustainable choices. A case study about the Environmental Agency UK shows how the agency relies on a staff travel hierarchy that embeds sustainability. It factors in carbon emissions to determine whether staff should take public transport, walk, ride a bicycle, or lease a car.

Aviva, the global insurance company based in London, meanwhile, uses a “Connected Reporting Framework (CRF)” that allows it to measure key performance indicators focused on five themes. These include customers, environment, people, suppliers, and communities. With this information Aviva can report carbon emissions, waste, and resource usage by its five themes. This results in performance benchmarking based on non-financial reporting.

And Sainsbury’s Supermarkets applies qualitative and quantitative financial and non-financial information decision analysis when reporting on their products and the supply chain upstream from their sales. This allowed Sainsbury’s to use reporting structures such as their Lamb Sustainability Assessment report. It looks at Sainsbury’s lamb sales supply chain of over 7,000 ranchers serving more than 500 Sainsbury grocery stores. It then develops key areas of vulnerability, benchmarks these areas, and improves their performance.

Accounting for Sustainability can be particularly valuable for organizations within the ecosystem services market. Case studies illustrate how to design reporting structures to integrate Key Performance Indicators (KPI) to outperform competitors. Using these indicators a forest carbon project developer could demonstrate superior industry performance by measuring its impact on water and its ability to sequester carbon. Another forest carbon project developer could integrate its dollar cost of production per carbon sequestered.

For businesses to thrive, new business models need to factor sustainability into their bottom lines. Accounting for Sustainability should inspire the ecosystem services market to develop specific metrics that embed sustainability within business operations. This will allow the transparent comparison of firms and projects and further develop a trusted marketplace.

(03/24/2011) Not too long ago policy-makers, scientists, and environmentalists saw biofuels as a significant tool to provide sustainable energy to the world. However, as it became clear that biofuels were not only connected to deforestation, pollution, and greenhouse gas emissions (sometimes exceeding fossil fuels), but also competed with the global food supply and water sources, biofuels no longer seemed like a silver bullet, but a new problem facing the environment and the poor. Still, biofuels have persisted not so much due to perceived environmental benefits, but to entrenched interests by the big agricultural industry, lobbyists, and governments. However, the Roundtable on Sustainable Biofuels (RSB) hopes to begin certifying environmentally friendly biofuels that don’t compete with food production or water sources.Green jeans: big companies start sustainable clothing initiative

(03/06/2011) Ever wonder how ‘green’ one pair of shoes was over another? Or how much energy, water, and chemicals went into making your pair of jeans? A new effort by over 32 companies, environmental organizations, and social watchdogs may soon allow shoppers to compare not only price and appeal, but sustainability too.

(02/21/2011) Investing around $1.3 trillion, which represents about 2% of the world’s gross domestic product (GDP), into ten sectors could move the world economy from fossil-fuel dependent toward a low carbon economy, according to report by the UN Environment Program (UNEP). In addition, the investments would alleviate global poverty and keep stagnating economies humming, while cutting humanity’s global ecological footprint nearly in half by 2050 even in the face of rising populations.